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Jaguar Land Rover Returns to Profitability

  • Greg Fitzgerald
  • Oct 31, 2019

Land Rover Defender Factory

 

After an incredibly rocky year and a half, Jaguar Land Rover is starting to see financial stability again. They posted a £156m pre-tax profit for the quarter covering July-September 2019, significantly up from the £395m loss they posted from April-June 2019.

The company had fought many headwinds over the past year and a half, in what became a sort of "perfect storm" of bad luck. First there was the uncertainty of Brexit, which even led to a factory shutdown in the spring around the time Britain was originally supposed to exit the EU, before Parliament gained a series of extensions from Brussels. The Chinese market, which JLR had used as somewhat of a crutch for several years, collapsed in the wake of reliability concerns and economic pain brought on in part by American trade pressure. Their diesel-heavy lineup was caught in the crosshairs of a Europe recoiling from Volkswagen's Dieselgate scandal.

The impact of all of this was almost a decade of growth being wiped away, in the middle of Land Rover's 70th anniversary celebrations. In 2015, profits topped £2 billion; in 2019, there was a £3.6 billion loss, of which £3.1 billion was writing down their immense investments in diesel technology.

For many years, JLR has driven themselves by the quest for sales numbers. At the beginning of Tata Group's ownership of the two brands in 2009, they sold about 200,000 vehicles globally between the two brands. A decade later, that had tripled, in good part from Chinese growth. The expansion of model lines helped, too, as did Jaguar's new SUV line based on Land Rover products. Suddenly, it looked like they'd be closing in on a million models a year in the next few years. The idea of that was mind-boggling, considering JLR is just two brands, one of which only produces SUVs and sells the vast majority of the vehicles.

The company has made many of its gains by becoming more efficient. Several thousand jobs were unfortunately cut in this process, and it has also required the realignment of facilities. The Discovery 5 and Defender are now built in a brand new factory in Nitra, Slovakia, with lower labor costs. The Discovery Sport, not an especially old vehicle having been launched in 2015, was redesigned to sit on the same platform as the new Evoque. With that, Land Rovers now sit on just two platforms -- Range Rover Evoque and Discovery Sport on the new Premium Transverse Architecture (PTA), and everything else on variants of the D7 platform. Go back to 2015, and there were four platforms, including the legacy Defender ladder-on-frame platform that was built in a completely different set of facilities at the Solihull plant.

Land Rover won't be focusing on sales numbers anymore, or so they say. They're more focused on building "the right product" now. They say they don't care about sales numbers for the new Defender, which is sure to be a juggernaut when it hits roads next year. But now they're more interested in building value and profit for the brand. Or at least, they say that.

In China, where quality issues have resulted in protests in front of JLR's Shanghai regional headquarters, there's been improvement as well. JLR has worked with dealers to improve the experience, and they do not intend to discount vehicles in China, even though price consciousness has become a major part of car buying there. The Chinese market will be a tough one to both crack and dominate long-term, and after being burned by it, JLR is not planning to be so heavily reliant on it again. They're instead moving upmarket, making a JLR product a status symbol.

During the past year, they have invested heavily in electric technology even as other financial issues swirled. The Jaguar I-Pace was the first result of this, becoming the first dedicated electric SUV to compete against the Tesla Model X. Now there's an electric sedan that will become the next generation of the iconic Jaguar XJ, and a more road-biased (but still relatively capable) distinct electric Range Rover model to bring a plug-in-only model to Land Rover's lineup.

The new partnership with BMW for powertrains -- both developing electric propulsion plants together, and buying BMW engines for high-performance models -- is helping, too. There's plenty of rumors in the auto world of BMW buying JLR up from Tata, reuniting Land Rover with a former corporate owner.

It's just one quarter, and it's been a lot of change. But after a difficult time, things look on the up for Land Rover again.


  • Written By
  • Greg Fitzgerald
  • Adventure addict. '90s Land Rover daily driver. Historic preservationist. Personal vehicles: 1994 Discovery I, 1994 Range Rover Classic, 1961 Series II.
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